Financial journalists say the finance industry's reputation has declined over the last year and financial services firms need to overcome a credibility gap with their constituents by being more honest and demonstrating they have customers' interests in mind, according to the second annual BackBay-Marketwire Financial Services Reputation Survey, conducted by BackBay Communications, a public relations firm focused on the financial services industry, and Marketwire, a full-service newswire and communications workflow solutions provider.
Of the 107 journalists polled, 83 percent said the reputation of the financial services sector has declined over the past year, with 59 percent saying it has declined significantly, and 24 percent saying it has declined slightly. They blame the decline on the taxpayer bailout of banks and the bonuses paid to Wall Street executives.
Fifty-four percent of reporters polled rated the communications efforts of financial services firms "fair," while 21 percent said they were "good," 2 percent "excellent," and 21 percent "poor."
Reporters say their own industry's effectiveness was only slightly better, with 42 percent giving journalists a "fair" rating at covering the finance sector, 38 percent rating themselves "good," 5 percent "excellent," and 12 percent "poor."
Most reporters don't expect any improvement in financial services firms' communications efforts in the first half of 2010, with 64 percent saying it will stay the same, 25 percent saying it will improve, and 9 percent anticipating a further decline.
According to respondents, the biggest communications challenges for financial services firms in the next six months will be overcoming a credibility gap with their constituencies (82 percent vs. 66 percent in the February 2009 survey), managing crises (33 percent vs. 57 percent in 2009), and responding to regulatory changes (49 percent vs. 50 percent in 2009). Reporters also said financial firms need to do a better job explaining complex developments in a way people can understand them.
But financial services companies have an opportunity to rebuild trust by being seen as honest and credible (74 percent vs. 69 percent in 2009), having their customers' interests in mind (64 percent vs. 58 percent in 2009) and being financially sound (41 percent vs. 71 percent in 2009). Reporters also said financial institutions need to admit they bear some responsibility for the financial crisis, be willing to accept reasonable reform, and educate citizens about the important role financial firms play in facilitating economic growth.
"While last year reporters were focused on the problems financial institutions were having communicating effectively during the depths of the financial crisis, this year's results reveal the extent to which trust has been lost and needs to be rebuilt," says Bill Haynes, president, BackBay Communications.
According to the financial reporters polled, the most common mistakes by financial firms that lead to negative media coverage include: evasive responses (79 percent), not responding to calls or e-mails seeking commentary (78 percent), and failure to communicate newsworthy developments promptly and honestly (73 percent).
Survey respondents say the best ways for financial services companies to receive positive media coverage is through having company executives available to discuss industry trends (79 percent) and developing relationships with reporters (76 percent).
"Relationships and respect are cornerstones of good media relations," says Haynes. "Journalists are always looking for competent, trustworthy sources with fresh news and insights to share on their company and the industry, who are also willing to be honest and forthright when their companies are facing difficulties. A strategic public relations firm can help companies identify news, conduct studies, write news releases and papers and make introductions to journalists that will lead over time to fair coverage and enhanced brand recognition."